VIENTIANE, LAO PEOPLE’S DEMOCRATIC REPUBLIC (31 July 2018) — The Asian Development Bank’s (ADB) Board of Directors has approved a $40.5 million grant to help farmers and agribusinesses develop sustainable and climate-smart agriculture value chains in the Lao People’s Democratic Republic (Lao PDR).

“Agriculture remains a significant portion of the economy of Lao PDR, but the sector’s vulnerability to climate change puts the country’s development prospects and food security at risk,” said ADB Principal Climate Change Specialist for Southeast Asia Mr. Srinivasan Ancha. “ADB’s support will help make the Lao PDR’s agriculture sector more commercialized, sustainable, and climate-resilient, improving the country’s growth prospects.”

Lao PDR’s economy predominantly depends on agriculture, which employs about 65% of the country’s workforce. But agriculture’s contribution to the country’s gross domestic product has declined, from 32.7% in 2010 to 19.8% in 2016. The sector is threatened by increasing floods and droughts brought on by climate change, as temperatures in Lao PDR are expected to increase by 2°C–3°C and the amount of rainfall likely to grow by 10%–30% by 2050.

The Climate-Friendly Agribusiness Value Chains Sector Project will help improve the climate resilience of infrastructure for the agribusiness value chains. This includes the rehabilitation of rural roads and small-scale irrigation infrastructure; the enhancement of crop research facilities and safety- and quality-testing infrastructure; and the improvement of climate-friendly post-harvest infrastructure by Laotian agribusiness enterprises.

The project will help Lao PDR improve crop productivity, diversify agricultural products, and enhance climate resilience by improving storage and processing facilities, promoting the use of biofertilizers and organic farming, and disseminating crop varieties that are flood- and drought-tolerant.

The project is in line with the government’s Agriculture Development Strategy to 2025, as it will boost the competitiveness of rice value chains in Khanmouane, Saravan, and Savannakhet provinces, and vegetable value chains in Vientiane, Champasak, and Sekong. This will help the government reach its goal of producing 4.7 million tons of agricultural crops and 2 million tons of quality rice for domestic and export markets.

ADB’s support, which will come from the Asian Development Fund, will help create an enabling environment for climate-friendly agribusinesses to promote sustainability along the sector’s value chains. The project is expected to benefit at least 100,000 people from 20,000 households in Lao PDR, increasing their income by at least 30%, and promote regional cooperation and integration in the Greater Mekong Subregion through harmonization of quality and safety standards and support to regional seed-trading agreements.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in cofinancing.